K-W Ignition Co. v. Unit Coil Co.

Citations

• 93 Ohio St. (N.S.) 128

Syllabus

<p>Contracts — License granted under letters patent — Termination and surrender — Payment of royalties and giving notice — Jurisdiction — State and federal courts — Invalidity of patent — Infringement — Accounting—Equity.</p> <p>1. Where a licensee under a contract obtained the right to manufacture and sell'Master Vibrators covered by letters patent, which contract provided 'for an accounting on or before the tenth day of each calendar month, for the number of vibrators sold by it during the preceding calendar month,' and which further contained the following clause for its termination: “It is mutually understood and agreed that the licensee may at any time surrender this license and terminate this agreement upon giving thirty days’ notice in writing sent by registered mail to the Unit Coil Company, provided that at the time of said surrender- and termination there are no suits or actions at law or in equity pending which have been instituted by the licensee in the name of the licensor, and provided, further, that at the time of such surrender and termination, all royalties due under this agreement shall be paid”— such license is not terminated by the giving of notice thereunder, unless the accrued royalties at the time of such surrender are fully paid, and the time of such surrender culminates at the end of the thirty-day period after the giving of such notice.</p> <p>2. Where the chief issue in a case is whether the licensee has terminated the agreement to pay royalties, a state court has jurisdiction, and the jurisdiction is not ousted by an answer pleading the invalidity of the patent.</p> <p>3. Where the licensee in such case pleads the invalidity of the patent and the giving of notice of termination of the license contract, if such issue of termination is proved at the trial, a state court loses its jurisdiction for an accounting for royalties accruing after such notice and the case becomes one for infringement, cognizable in the federal court.</p> <p>4. Howev